CIA says it gets its money's worth from Pakistani spy agency

A damaged car is removed after the bombing at the regional office in Peshawar of Pakistan's Inter-Services Intelligence spy agency. The U.S. has had misgivings about the ISI, with some officers believed to support radicals. (K. Parvez / Reuters / November 13, 2009)

It has given hundreds of millions to the ISI, for operations as well as rewards for the capture or death of terrorist suspects. Despite fears of corruption, it is money well-spent, ex-officials say.

Reporting from Washington - The CIA has funneled hundreds of millions of dollars to Pakistan's intelligence service since the Sept. 11 attacks, accounting for as much as one-third of the foreign spy agency's annual budget, current and former U.S. officials say.

The Inter-Services Intelligence agency also has collected tens of millions of dollars through a classified CIA program that pays for the capture or killing of wanted militants, a clandestine counterpart to the rewards publicly offered by the State Department, officials said.

The payments have triggered intense debate within the U.S. government, officials said, because of long-standing suspicions that the ISI continues to help Taliban extremists who undermine U.S. efforts in Afghanistan and provide sanctuary to Al Qaeda members in Pakistan.

But U.S. officials have continued the funding because the ISI's assistance is considered crucial: Almost every major terrorist plot this decade has originated in Pakistan's tribal belt, where ISI informant networks are a primary source of intelligence.

The White House National Security Council has "this debate every year," said a former high-ranking U.S. intelligence official involved in the discussions. Like others, the official spoke on condition of anonymity because of the sensitivity of the subject. Despite deep misgivings about the ISI, the official said, "there was no other game in town."

The payments to Pakistan are authorized under a covert program initially approved by then-President Bush and continued under President Obama. The CIA declined to comment on the agency's financial ties to the ISI.

U.S. officials often tout U.S.-Pakistani intelligence cooperation. But the extent of the financial underpinnings of that relationship have never been publicly disclosed. The CIA payments are a hidden stream in a much broader financial flow; the U.S. has given Pakistan more than $15 billion over the last eight years in military and civilian aid.

Congress recently approved an extra $1 billion a year to help Pakistan stabilize its tribal belt at a time when Obama is considering whether to send tens of thousands of additional troops to Afghanistan.

The ISI has used the covert CIA money for a variety of purposes, including the construction of a new headquarters in Islamabad, the capital. That project pleased CIA officials because it replaced a structure considered vulnerable to attack; it also eased fears that the U.S. money would end up in the private bank accounts of ISI officials.

In fact, CIA officials were so worried that the money would be wasted that the agency's station chief at the time, Robert Grenier, went to the head of the ISI to extract a promise that it would be put to good use.

"What we didn't want to happen was for this group of generals in power at the time to just start putting it in their pockets or building mansions in Dubai," said a former CIA operative who served in Islamabad.

The scale of the payments shows the extent to which money has fueled an espionage alliance that has been credited with damaging Al Qaeda but also plagued by distrust.

The complexity of the relationship is reflected in other ways. Officials said the CIA has routinely brought ISI operatives to a secret training facility in North Carolina, even as U.S. intelligence analysts try to assess whether segments of the ISI have worked against U.S. interests.

A report distributed in late 2007 by the National Intelligence Council was characteristically conflicted on the question of the ISI's ties to the Afghan Taliban, a relationship that traces back to Pakistan's support for Islamic militants fighting to oust the Soviets from Afghanistan.

"Ultimately, the report said what all the other reports said -- that it was inconclusive," said a former senior U.S. national security official. "You definitely can find ISI officers doing things we don't like, but on the other hand you've got no smoking gun from command and control that links them to the activities of the insurgents."

Given the size of overt military and civilian aid to Pakistan, CIA officials argue that their own disbursements -- particularly the bounties for suspected terrorists -- should be considered a bargain.

"They gave us 600 to 700 people captured or dead," said one former senior CIA official who worked with the Pakistanis. "Getting these guys off the street was a good thing, and it was a big savings to [U.S.] taxpayers."

A U.S. intelligence official said Pakistan had made "decisive contributions to counter-terrorism."

"They have people dying almost every day," the official said. "Sure, their interests don't always match up with ours. But things would be one hell of a lot worse if the government there was hostile to us."

The CIA also directs millions of dollars to other foreign spy services. But the magnitude of the payments to the ISI reflect Pakistan's central role. The CIA depends on Pakistan's cooperation to carry out missile strikes by Predator drones that have killed dozens of suspected extremists in Pakistani border areas.